While we buy Life Insurance to protect our families against unforeseen circumstances. Life Insurance provides guaranteed protection against the Life goals and is the most important investment of the family. However, these are long term products aimed to achieve a particular milestone of the life for which it is bought for example child education, child marriage, pension plans etc
Sometimes when we face liquidity crunch, we are forced to look at stopping our insurance policies by surrendering the same, thereby we put our family into threat of lack of protection.
Do you know instead of surrendering the policy, you can take loan on your policy?
Yes the loan available under your traditional policy is 80-90% of the surrender value.
Term policies do not qualify for loan as they do not have any cash value. ULIPs offers partial withdrawal based on the fund value.
The qualifying criterion for loan is that you must have paid three premiums under the policy. You can check the eligibility of loan from your insurer. Its always recommended to take loan then to surrender your policy.
The interest charged depends on the number of premiums paid and is much lower than the prevailing bank rates and hence is a good option to avail.
You have to fill a prescribed form along with the original policy. The policy is then assigned to the lender till the loan amount is repaid.
In case pf loan you need to continue to pay the premium as policy is in force, if however, you do not pay the premium and the value falls below one premium then the company may foreclose the policy with an intimation to you.
The loan needs to be repaid during the policy term. The customer may pay principal amount and interest or just the interest. In case he pays just the interest then the principal amount will be deducted at the time of the maturity payment under the policy.
If you are facing any issue related to loan on Insurance Policy, do feel free to reach us at InsuranceSamadhan.com –
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